Cycle seen covered in top type of oil (7)
I believe the answer is:
linseed
'type of oil' is the definition.
(I've seen this before)
'cycle seen covered in top' is the wordplay.
'cycle' indicates anagramming the letters.
'covered in' is an insertion indicator.
'top' becomes 'lid' (lid is a kind of top).
'seen' with letters rearranged gives 'nsee'.
'nsee' placed within 'lid' is 'LINSEED'.
(Other definitions for linseed that I've seen before include "Type of oil" , "Part of flax used as oil" , "Oil produced from flax" , "Oil-producing plant" , "Oil applied to cricket bats" .)